Is Asia Pacific at risk of losing out on post-pandemic economic recovery by not leveraging on next-generation cloud computing?

Is Asia Pacific at risk of losing out on post-pandemic economic recovery by not leveraging on next-generation cloud computing?

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Is Asia Pacific at risk of losing out on post-pandemic economic recovery by not leveraging on next-generation cloud computing?

The Asia Cloud Computing Association revealed markets in Asia Pacific risk losing out on post-pandemic economic recovery by not taking advantage of next-generation cloud computing technologies.

In the current economic climate affected by the pandemic, some markets seem to have paused on technology and digital infrastructure investments, despite cloud readiness advancing in APAC.

The Executive Director of the Asia Cloud Computing Association, May-Ann Lim, said: “These observations are of concern to us at the ACCA.”

The findings were detailed in the ACCA’s 2020 Cloud Readiness Index. The CRI 2020 discovered that some of the hardest-hit economies with high infection rates were also some of the top scorers, including Singapore, South Korea and Hong Kong.

Ms Lim added: “Cloud readiness and adoption is very intimately linked with economic recovery from COVID-19, mainly because cloud readiness is a measure of digital resilience.”

Cloud computing technologies in Asia have seen an increase in usage as a result of work from home orders caused by the pandemic.

While cloud readiness scores advanced for all 14 economies in APAC, the lowest scores were found in Vietnam, Philippines, Indonesia and China.

“Every economy has been impacted, and everyone would have had some slowdown of the economy, but I would say that cloud readiness is one of the measures which would contribute to a faster economic recovery,” said Ms Lim.

The low scores were found due to many economies’ fragile core capabilities in managing natural risks, privacy and cybersecurity.

Ms Lim added: “[Markets] have decided to put in regulatory restrictions around data flows at a time when the freedom to use cloud productivity tools is needed the most to recover from the economic fallout from COVID-19.”

These data localisation regulations enforced by governing bodies obstruct cross-border data flows and international connectivity required to empower the use of global cloud applications and growth of digital businesses.

The ACCA’s Cloud Readiness Index ranked 14 countries in Asia Pacific against parameters, including international connectivity, power sustainability, data center risk and cybersecurity.

Here are some highlights and recommendations to increase cloud readiness across the region.

South Korea rises through the ranks

South Korea moved up to fifth place in 2020 from seventh in 2018. The Land of the Morning Calm saw notable improvements in privacy, cybersecurity and regulatory environment, but a significant fall in data center risk and a low score in international connectivity.

Data center risk consists of natural hazards, terrorism, the quality of electricity supplies, airport connectivity and more defined by TRPC Data Center Security Risk Index.

Digital Realty, a leading global provider of data center, colocation and interconnection solutions, is set to enter into South Korea with their first carrier-neutral facility in Seoul. Following its completion in 2021, the data center will aim to boost the country’s digital economy.

Digital Realty CEO, A. William Stein, said: “South Korea is incredibly well positioned as a digital hub and center for innovation within the region, given the growing global demand for big data, mobile services and connected devices.”

> Register now for Digital Realty’s historic virtual Seoul Data Center Launch

The Asia Cloud Computing Association believes the strict data localisation rules of the Korea Internet & Security Agency has slowed the availability of cloud services, despite their Cloud Computing Act in 2015 and investments to empower digital transformation through AI and 5G. As a result, only five cloud service providers have received cloud security certifications required to provide services to the public sector, including AWS, Microsoft Azure, IBM Cloud and LG CNS.

Indonesia sees a drop, despite a promising digital economy

Indonesia was described as a highly promising and dynamic digital economy. 

But the ‘Emerald of the Equator’ dropped one position to 12th due to its fall in broadband quality and little improvements in parameters apart from connectivity and cybersecurity.

Upcoming updated cybersecurity and data protection laws in Indonesia may help the country rise in the rankings by harmonising the fragmented regulation environment that exists, empowering businesses to adopt and develop new technology.

Despite relaxed data regulations, the country is also expected to experience investments worth over US1$ billion and an annual growth rate of 11% in the data center market, driven by the rise in cloud adoption.

Malaysia stays solid, but regulations slow progress

The good and possibly not so good news for Malaysia is that it was the only APAC economy not to move in the rankings since 2014, retaining its 8th place position.

The country saw sharp improvements in many parameters this year, including connectivity, energy sustainability, data center risk and connectivity. 

The Government has been active in encouraging cloud adoption by creating a data exchange hub for ministries, plans for smart cities and a digital identity platform known as MyIdentity.

But Malaysia was left in the same position due to restrictions caused by the regulatory environment, privacy laws and intellectual property protection.

The country’s position may begin to improve once it begins to tackle cybersecurity issues and educates younger generations on cloud computing.

The Philippines’ Cloud First policy couldn’t break its fall

The Philippines fell from 9th in 2018 to 11th in 2020. 

Weaker international connectivity, sustainable energy, data center risk and cloud security were amongst the reasons for this drop. 

The fall could not be saved by the country’s ‘Cloud First’ policy and regulations launched in 2017, which is still in the implementation stages today.

There may be hope for the Philippines with more connectivity coming from DITO’s new data center and an e-store to help agencies compare cloud services expected to be released this year and renewed optimism for improving broadband connectivity with initiatives like the Philippine Digital Transformation Strategy.

Singapore loses first place to Hong Kong

The Little Red Dot lost the top spot to Hong Kong in the CRI rankings, falling to second place.

Singapore missed out on first place after seeing falls in international connectivity and freedom of information beyond second place in these parameters.

The country’s proposals for floating data centers could boost its position once again by overcoming the struggles in connectivity, land sparsity and property prices

On the other hand, broadband quality and regulatory environment in cybersecurity and data protection remained strong for the country, with a progressive approach to technology.

The ACCA predicts that Singapore’s top-down approach and weaknesses in cloud governance might hinder digital competitiveness in the future, as it may struggle with adopting new technology like 5G and Internet of Things in a nimble, fast paced manner.

Could Singapore lose its top spots to emerging markets that can take advantage of these technologies and leapfrog the competition?

Thailand could be on the verge of greatness

Thailand has improved its position to ninth place after bettering its international connectivity, data center risk and privacy policies. But with improvements in connectivity and getting more of the population online comes falls in broadband quality and energy sustainability.

The ACCA predicts that Thailand is ‘on the verge of “leapfrogging” ahead of more mature economies’, but creating a flexible regulatory landscape and market dominance from tech giants over smaller, local startups might slow down the country’s digital economy.

Support for cloud readiness may come from the Thai Government after its announcement to approve funding for a $146m state cloud and data center. This will include cloud computing courses for 2,500 government officials.

Vietnam remains in last place

For the third consecutive Index, Vietnam has placed last out of 14 countries in APAC.

While the country does not rank in last place for all parameters, it has fallen behind on international connectivity, data center risk and its difficult to coordinate regulatory environment. Yet, these parameters could be improved following the completion of the country’s biggest data center by FPT Telecom.

However, Vietnam is making strides to improve its sustainable energy and cybersecurity, which is a good sign, as the country looks to power its own Silicon Valley with billion dollar investments.

How can we strengthen cloud computing readiness across Asia Pacific?

Cloud readiness enables industries and markets to get ahead of mature economies by taking advantage of ‘leapfrog’ technologies like 5G, Internet of Things, AI, automated devices, and more.

Since 2018, there has also been no new ‘Cloud First’ policies launched in any country in Asia Pacific even though these measures are recognised as the key driver for digital economies looking to harness the technological advancements empowered by cloud computing.

The ACCA recommended that those economies with ‘Cloud First’ policies focus on making them a reality, while those without these initiatives should consider doing so by supporting cloud vendor accreditation schemes and guidelines for security standards.

The cybersecurity shortcomings of one economy also jeopardise the economic dynamism of another, therefore, countries in APAC should consider aligning cybersecurity regulations with a harmonised approach.

We have seen many countries begin to adopt 5G and make investments in AI, but data localisation measures are restrictive of cloud technology and the free, inexpensive, uncomplicated flow of data across borders.

Ms Lim suggested that we need a cross-disciplinary team to provide review and advice to cross-border trade discussions. This would include both trade negotiators and cybersecurity experts, as well as the borders and customs department.

“A starting point would be to establish a structured cross-border data flow framework for data, such as the APEC CBPR. However, the discussion of cross-border data flows needs to be expanded beyond just APEC economies, and move into some other forums which include all digital economies,” said Ms Lim.

Bridging the gap between mature and emerging markets requires APAC economies to work together to enable innovation and investment in a competitive and sustainable manner.

To effectively recover from the pandemic, APAC economies should implement policies that allow data-driven businesses to thrive without having to choose between innovation and disruption.

Ms Lim advised: “One thing which governments should also focus heavily on is that cloud infrastructure and internet capacity is not evenly distributed.”

When cities went into lockdown mode, with remote working becoming commonplace, a true digital divide in Asia Pacific became apparent, Ms Lim believed, as not everyone has internet connectivity or access to cloud computing in their homes.

Ms Lim said: “Governments in SEA should look closely into the digital gaps … and look beyond the urban-rural divide, but also within cities where there may be a difference between bandwidth available for business connections, and home connections.”

To strengthen cloud readiness, Ms Lim recommended investment in data centers, any technology allowing better computing power to be managed like edge computing, as well as cybersecurity since this is the ‘the key to the castle of personal data’.

Ms Lim had an optimistic view of the future: “There is a funny meme going around at the moment, with the question ‘Who led the digital transformation of your company?’ On the list, the CEO and CTO are not selected, COVID-19 is the circled answer. I think that COVID-19 and the need to implement more remote-access to data, and more work-from-home arrangements, is going to push cloud computing usage, not just in Asia, but all over the world.”

What do you think APAC economies should do to leverage on cloud technologies while remaining compliant with government regulations?

Find out how data centers and cloud can boost digital economies

The demand for data centers is continuing to grow with the adoption of more cloud services.

In South Korea, businesses are predicted to spend a huge US$3 billion on cloud services in 2021, making the country a perfect place to expand data center operations.

Digital Realty is one such data center provider that looks to boost South Korea’s digital economy by meeting connectivity demands and empowering digital transformation through a new Seoul data center.

Be part of history, as Digital Realty virtually launch their first South Korean data center on Wednesday 17 June.

Register now to be part of South Korea’s digital future!

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